Earnings reports start next week. click.click.click.click.click.click.click.click OVER THE TOP!! YEEHAAAA!!!!!!
Charts and tables up. Taxes done. So here's what I see....
As per the COFG ESSAYS elsewhere on my site, there was this dotcom bubble and the ensuing dotcom blow up. I was on the periphery of all that. I was working in the southbay and I worked OT hours out the wazoo with a thousand others at wafer fabs, chip tool makers, and server farms. Server farms being built in one of the highest priced real estate areas in the USA and the one area with the most expensive and unreliable electric power systems??!!!? Castles built on sand, ya know... My middle son was a dotcommie at a startup and worked side by side with future dotcom millionaires. It was an amazing once in a lifetime time event.
It was unsustainable and the whole thing crashed. We had the dotcom depression in the Bay Area. The first guys in and out made it away with millions or jail sentences. I met a friend of my son's who looked like a barefoot hippie less the flowers and long hair. He was a millionaire at 26. My son was 9 months late to the party and ended up just an ordinary working guy and the company he worked for melted down. The stock market bottomed in 2003 and there was blood in the streets (Wall Street) and everybody figured ya couldn't even sell the country to the Japanese since they'd crashed the previous decade and it didn't look like they'd ever come back. The Japanese took rates to below zero and they couldn't get anything going even after a decade of that. It was a commonplace worry that the USA was going to that particular hell too. The Fed panicked and drove interest rates down to one percent and started to inflate the national real estate bubble in place of the local internet bubble. In other words, the Fed spiked the punch bowl.
So we had us a real estate party. In 2005 the house next door sold for 80% more than we'd paid for ours five years earlier and 30% more than a nearly identical hose on the next block went for the same week. That was fun bubble time too.
That was about when we had the first fight at the Real Estate party and the first throwing up passed out guest on the couch. Things started to go south early/mid last year, but ya party on cuz it feels so good. Ya gotta job, ya can get a loan, ya can buy a house or three. If ya can't get a loan, ya get a liar's loan. or, someone get's you a loan. Or the builder loans you the money. Over the last 6 months, it's become apparent that we've been listening to sirens and not the band and that ain't more party goers knockin', "Tha's the COPS (hic)!!!!!
So the subprime and alternate A market are throwing off bankruptcies. A sizable portion of the economy (housing) is beset with 8 months of inventory and worst case, we could see three to four times the yearly sustainable demand in housing up for sale at the same time. And there is the matter of an estimated $565 billion of development loans outstanding between the developers and the banks. This could get real bad. At the least, we have a year or two of declining earnings growth in much of the economy and that probably will lead to a lot of future value priced into stocks coming out of the price. Or we could have a bank crisis like the Savings and Loan crisis of the 90's.
The question is, given that the US no longer drives the world economy like it used to because it ain't the same world, has the game changed enough to pull us through this rough spot with just a little turbulence? I dunno.
But I don't trust that forward guidance will be good enough for the companies about to report. So I'm in mostly cash instead of exposed to domestic stocks, until I get clarity. And I'm moderately exposed to foreign equities because there are a lot of people in a lot of places who are hankering for the middle class dream and a lot of already rich and powerful guys are going to get a lot more rich and powerful helping them get there.
Of course, I could be wrong. If so, I'll see that it's not working and change directions before too much damage is done. Or maybe it's just my timing and I'll just need to pull in my horns for a while. Regardless, I gotta plan and the tools to get it realized as well as the ability to turn on a dime if that's the smart move. So for now, i'm waiting and seeing...
As per the COFG ESSAYS elsewhere on my site, there was this dotcom bubble and the ensuing dotcom blow up. I was on the periphery of all that. I was working in the southbay and I worked OT hours out the wazoo with a thousand others at wafer fabs, chip tool makers, and server farms. Server farms being built in one of the highest priced real estate areas in the USA and the one area with the most expensive and unreliable electric power systems??!!!? Castles built on sand, ya know... My middle son was a dotcommie at a startup and worked side by side with future dotcom millionaires. It was an amazing once in a lifetime time event.
It was unsustainable and the whole thing crashed. We had the dotcom depression in the Bay Area. The first guys in and out made it away with millions or jail sentences. I met a friend of my son's who looked like a barefoot hippie less the flowers and long hair. He was a millionaire at 26. My son was 9 months late to the party and ended up just an ordinary working guy and the company he worked for melted down. The stock market bottomed in 2003 and there was blood in the streets (Wall Street) and everybody figured ya couldn't even sell the country to the Japanese since they'd crashed the previous decade and it didn't look like they'd ever come back. The Japanese took rates to below zero and they couldn't get anything going even after a decade of that. It was a commonplace worry that the USA was going to that particular hell too. The Fed panicked and drove interest rates down to one percent and started to inflate the national real estate bubble in place of the local internet bubble. In other words, the Fed spiked the punch bowl.
So we had us a real estate party. In 2005 the house next door sold for 80% more than we'd paid for ours five years earlier and 30% more than a nearly identical hose on the next block went for the same week. That was fun bubble time too.
That was about when we had the first fight at the Real Estate party and the first throwing up passed out guest on the couch. Things started to go south early/mid last year, but ya party on cuz it feels so good. Ya gotta job, ya can get a loan, ya can buy a house or three. If ya can't get a loan, ya get a liar's loan. or, someone get's you a loan. Or the builder loans you the money. Over the last 6 months, it's become apparent that we've been listening to sirens and not the band and that ain't more party goers knockin', "Tha's the COPS (hic)!!!!!
So the subprime and alternate A market are throwing off bankruptcies. A sizable portion of the economy (housing) is beset with 8 months of inventory and worst case, we could see three to four times the yearly sustainable demand in housing up for sale at the same time. And there is the matter of an estimated $565 billion of development loans outstanding between the developers and the banks. This could get real bad. At the least, we have a year or two of declining earnings growth in much of the economy and that probably will lead to a lot of future value priced into stocks coming out of the price. Or we could have a bank crisis like the Savings and Loan crisis of the 90's.
The question is, given that the US no longer drives the world economy like it used to because it ain't the same world, has the game changed enough to pull us through this rough spot with just a little turbulence? I dunno.
But I don't trust that forward guidance will be good enough for the companies about to report. So I'm in mostly cash instead of exposed to domestic stocks, until I get clarity. And I'm moderately exposed to foreign equities because there are a lot of people in a lot of places who are hankering for the middle class dream and a lot of already rich and powerful guys are going to get a lot more rich and powerful helping them get there.
Of course, I could be wrong. If so, I'll see that it's not working and change directions before too much damage is done. Or maybe it's just my timing and I'll just need to pull in my horns for a while. Regardless, I gotta plan and the tools to get it realized as well as the ability to turn on a dime if that's the smart move. So for now, i'm waiting and seeing...
Calendar
